Live Update

Wednesday, April 1, 2009

04/01/2009 Market Recap: 2 vs 2 Bear Won

7.1.0 Use n vs n Rule to Identify a Trend Change.  Two down days versus two up days, bear won because the downside movement is bigger.  Even if SPX goes above 833, bulls would have spent three days to breakeven what bears get in two days, so this conclusion still hold.  You may check the chart by yourself the difference between recent N vs N and previous ones during the strong rally.


8.0.3 Use n vs n Rule to Identify a Trend Change 2008.  Some of you may wonder why bears won today after getting a higher high.  Regardless of higher high, let’s see how to use this rule to pinpoint two trend changes in May and August in 2008.  You may also apply this rule to catch the trend changes from Oct 2008 to Mar 2009.  I can guarantee this is very simple and effective.  All in all, my market recap is based on observed evidences which is surely past evidences.  Therefore, exception can always happen which is out of my control.  Furthermore, from these trend changes you can see that, every time of the trend change takes several times of N vs N instead of a single shot.  So, although I believe the uptrend is weakening according to the current N vs N, but bears are not exempted of being burned out.


7.0.2 SPX and CPC Divergence Watch.  You might still remember the firework setup while CPC is below 0.8 some time ago.  In the past, this kind of rally would have caused CPC falling below 0.8.  While today CPC advanced a little bit and formed a negative divergence.  On the following chart, you can see that this is a sign of short-term pullback.


1.3.7 Russell 3000 Dominant Price-Volume Relationships, 1316 stock price up volume down, quite bearish.  But 1316 is not a big number, and it may not be strong enough to support a pullback tomorrow.



  1. I'm ready to get FAZ SDS in the morning with that big gap opening.

  2. Your charts need to be LARGER when clicked - much LARGER. The R3000 is useless at that size.
    1280 wide please.

    Thanks for your work man.

  3. Cobra, your n versus n indicator is a some kind of a momentum indicator. Thanks for your work, always very thankful to read your wise point of view.

  4. Hi Cobra,
    I think there is something wrong regarding your chart size, please check.

  5. Well, the bulls pushed above 833!
    Scarry, I did not expect that, I thought M2M relaxation was priced in the market.
    I hope you are right as I'm short. I wish I took my profit in AM yeterday.

  6. Well, even I'm right, as I said, that doesn't mean the market will drop right away. It takes n times "n vs n" before the market actually turns.

  7. Cobra, does the "n vs n" rule works for individual stocks too? Thanks.

  8. I never verified this with individual stock.

  9. I don't understand all the praise. I appreciate you taking the time to perform this analysis, Cobra, but nobody seems to be willing to point out the obvious: HOW COULD YOU BE MORE WRONG?!

    You have been talking about the market topping for day after day. Meanwhile, the market has been exploding higher and higher.

  10. Yeah, finally, thanks. Don't get me wrong, I really appreciate this kind of comment.

    As long as today closes in green, I have to recount n vs n rule tonight. Today's higher high makes the past days count invalid.

    But a topping is a slow process, never had I said a single word that this is a top instead I kept saying be careful and I don't argue with the signals. I made a mistake in today's report saying SPX 833 didn't matter, I'll correct it tonight. But I don't think I've been wrong for those days.

  11. Got some FAZ and SDS when SPX around 830. I'll wait and see where it's going from here.

  12. Hi!Cobra
    Do you think SPX will drop to 550 sometime this year?

  13. 550 I'm not sure, but I still believe this is a bear market. What we see now is very common in a bear market, a sharp rebound.



The information contained on this website and from any communication related to the author’s blog and chartbook is for information purposes only. The chart analysis and the market recap do not hold out as providing any financial, legal, investment, or other advice. In addition, no suggestion or advice is offered regarding the nature, profitability, suitability, sustainability of any particular trading practice or investment strategy. The materials on this website do not constitute offer or advice and you should not rely on the information here to make or refrain from making any decision or take or refrain from taking any action. It is up to the visitors to make their own decisions, or to consult with a registered professional financial advisor.

This websites provides third-party websites for your convenience but the author does not endorse, approve, or certify the information on other websites, nor does the author take responsibility for a part or all materials on the third-party websites which are not maintained by the author.